Friday, 9 June 2017

What’s next? – USDJPY 09.06.17

The USDJPY traded around 110.69 as of 14:45 GMT on Friday, adding 0.61 percent on the back of easing political risks and a moderate recovery of the greenback.

The US dollar index, which gauges the greenback against a basket of six major rivals, was up 0.47 percent at 97.35, moving close to its highest level since May 30.

The dollar was able to pair some losses as Wall Street showed signs of relief regarding the testimony of former FBI director James Comey before the Senate. Investors think it’s unlikely that the Comey-Trump scandal would hurt the ability of the president to push economic reforms.

On Thursday, Comey said President Donald Trump fired him as a way to derail his investigation into potential links between the Trump campaign and the Russian government. Comey assured there were plenty of evidence to prove Russia’s meddling in the November 2016 election.

The dollar/yen is widely affected by risk sentiment, as the dollar is a pro-risk currency and the yen is perceived as a safe-haven asset. Yesterday, the pair settled at 110.02, up 0.19 percent.

The USDJPY also counted on a weaker euro following a disappointing statement from the European Central Bank. The regulator not only left everything steady, as it was expected, but also confirmed that the quantitative easing (QE) won’t be touched in the near time and even said it might be extended if the ECB authorities considered it necessary.

In the days to come, the pair will likely start reacting on expectations for a rate hike at the June 13-14 monetary policy meeting of the Federal Reserve. The dollar is supported by rate moves, which increases demand for risky assets. According to CME Group’s FedWatch tool, chances for a rate increase are currently standing at 99.6 percent.